How to bounce back from financial setbacks: 6 more tips
Last week, we talked about failure and financial setbacks, and the importance of learning from our financial mistakes so we can come out on top.
Getting out of the hole and back on top should be priority number one, and if your financial setback has got you low on funds and high in debt, then here are 6 more actions you can take ASAP to help your situation:
1. Review your expenses
Work towards eliminating all non-essential expenses for the time being, and minimising where you can. This may mean cutting off Foxtel, reducing your food spending, reducing your entertainment money and going without some extra luxury items that you may have become accustomed to. Fingers crossed it’s only in the short term, so don’t think of this as a life sentence.
2. Reducing your private health insurance cover
If you can help it, don’t cancel your private health insurance because you avoid the additional 1% tax by keeping it. You can, however, call your health insurance company and enquire about reducing down your cover to just the basic hospital policy only. This means that you get to keep the tax advantage, retain a basic level of cover and it also means that when things improve financially, you can update the policy again without having to go through the full application process.
Work towards eliminating all non-essential expenses for the time being … Fingers crossed it’s only in the short term, so don’t think of this as a life sentence
3. Contact Centrelink
Do this as soon as possible. You need to find out what, if any payments are available to you and the time frame that you must wait. The sooner you get onto it the better. Sometimes you will need to wait up to 13 weeks before you qualify for any benefits.
4. Consider accessing your superannuation account in hard times
This is not common but is potentially an option later down the track. In order to qualify for early release of some of your super funds you need to:
- Be receiving some form of government benefits for at least 26 weeks (hence, step 3 is important), and
- Demonstrate that you are unable to meet any immediate family living expenses
This isn’t always the best option, because the amount you withdraw is taxed heavily, and you are only able to access a maximum of $10,000 pre tax, in a 12 month period.
5. Call your life insurance providers
Some products have the option to put your premiums on hold for up to 3 months if you are having issues financially and allow you to retain the full insurance cover. Cancelling this cover should not be one of your first options, but it’s great if you have the option to alleviate the premium payments in the short term.
6. Call the companies you owe money to
If you have debt that you do not believe you will be able to service in the short term, then contact your creditors to talk to them about options. You may need to change the repayments to interest only, or the providers may be willing to put payments on hold during this time. If you get on the front foot they are more willing to come to the table with an action plan.
Whatever your situation, there will be ways that you can dig yourself out and get back to living life. The best thing that you can do is accept where you are and take steps to change your situation.
Cara Brett is the Director and Senior Financial Adviser at Bounce Financial. Having worked in the financial services industry since 2003, she saw an opportunity to work with the young professionals and the movers and shakers in Brisbane, and so Bounce was born.